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Kenyan tech startups drive Africa’s record rise in debt financing
The 2025 Partech Africa Tech Venture Capital Report shows that debt deal activity rose sharply on the continent last year, with 107 transactions recorded compared with 77 in 2024, the highest level ever tracked.
Kenyan technology startups are increasingly turning to debt financing as a primary source of capital, reflecting a broader shift in Africa’s venture funding landscape, where more young businesses are tapping credit.
New data from global tech investment firm, Partech, shows that in 2025, debt financing across the African tech startup ecosystem hit a record $1.64 billion (Sh211.72 billion), up 63 percent from $1.01 billion(Sh130.39 billion) in 2024 and higher than the $1.2 billion (Sh154.81 billion) debt raised in 2023.
In Kenya alone, startups borrowed $498 million (Sh64.4 billion), up from $382 (Sh49.31 billion) million in 2024 and $385 million (Sh49.70 billion) in 2023. Kenya led Africa’s debt market last year, accounting for 30 percent of all tech debt raised on the continent.
Debt financing entails startups raising capital by borrowing money that must be repaid over time, usually with interest.
It includes traditional bank loans and credit union facilities, venture debt, revenue-based financing (repayments linked to cash flows), and personal borrowing, common among very early-stage founders.
Equity financing, meanwhile, involves selling ownership stakes in businesses, allowing investors to share in future upside as well as risk. This can include funding from angel investors, venture capital firms, and equity crowdfunding platforms.
The 2025 Partech Africa Tech Venture Capital Report shows that debt deal activity rose sharply on the continent last year, with 107 transactions recorded compared with 77 in 2024, the highest level ever tracked.
In 2024, when Kenyan startups raised $382 million (Sh49.31billion) in debt, some $221 million (Sh28.53 billion) in equity was raised, making debt the dominant source of capital that year.
Last year, investment into Kenyan ventures rose on both fronts, but the gap narrowed; startups raised $498 million(Sh64.4billion) in debt and $539 million(Sh69.58billion) in equity, making debt 48 percent of the total $1.03 billion(Sh132.97billion)funding raised, according to Partech’s analysis.
Meanwhile, debt represented 41 percent of all capital volume deployed in African tech ventures, up from 31 percent in 2024 and 17 percent in 2019. In deal terms, the report notes that debt accounted for 19 percent of all transactions, nearly double its share six years earlier.
While equity has remained Africa’s dominant funding source over the years, most of the continent’s funding growth in 2025 came from debt, which grew 63 percent year-on-year.
“Debt is no longer a cyclical or marginal complement to equity, but a structurally embedded financing layer in the African tech ecosystem, increasingly shaping both capital deployment and market dynamics,” notes the report.
Industry observers say the trend reflects the maturation of startups, particularly in markets such as Kenya, as firms begin to generate increasingly predictable revenues.
“As companies scale, debt becomes more attractive because it allows founders to raise capital without diluting ownership and is often used for defined, revenue-generating needs,” Makenzi Muthusi, a partner in deals and strategy at the consulting firm KPMG, told the Business Daily.
“No founder wants to have ceded control of their business by the time it gets to advanced stages such as an IPO (initial public offering).”
Still, the rise of debt should not be read as an automatic signal of healthier companies, said Benjamin Singh, partner at Push Venture Capital.
While access to debt often reflects clearer cash flows and more predictable business models, “it can also mean founders are optimising for non-dilutive capital when equity pricing is constrained, or equity raises are taking longer.”
